ӣƵ

‘We must think big to tackle declining productivity levels’

Economic Development Minister Kirsten Morel addressing delegates at the 2024 ӣƵ Business Productivity Conference Picture: DAVID FERGUSON (38412754)

SHOULD ӣƵ have a wind farm, a university and/or a bridge to France?

These are big questions but, as Economic Development Minister Kirsten Morel said at last week’s ӣƵ Business Productivity Conference, the Island needs to think big if it is to tackle the problem of declining productivity.

“There is no one magic bullet but we need to be bold, imaginative and think of new things,” he said. “That means that we need to look at some of these bigger projects which might help us to make significant productivity improvements. And the improvements we need to make are significant. We are talking about gains greater than those seen during the Industrial Revolution if we are to escape the cycle of declining productivity which we have seen for the past 15 or so years.”

Reversing this cycle, he added, was essential for maintaining and improving the quality of life in the Island.

“One of the reasons I talk about productivity so much is that it is the key driver of our living standards,” he explained. “We are suffering declining living standards because of declining productivity and, as an island, we are starting to feel slightly poorer.

“This situation is even more serious because we know that, in 15 or 16 years’ time, the working-age population will have declined to the point that, if we want to maintain standards at their current level, if we do not make any changes and do not increase productivity per person, we will need a population of 150,000, and you can imagine the impact that would have on the Island.

“If we are going to meet this challenge and even just maintain today’s standard of living, we therefore have to become more productive. It is that simple.”

While acknowledging the challenges associated with achieving this “simple” goal, ӣƵ Business chief executive Paul Murphy, in his welcome to delegates, highlighted some key findings from the organisation’s latest productivity survey.

“Of the 315 people who responded to the survey, 63% felt that money was being wasted at work,” he said. “Additionally, respondents said that, on average, 25% of their day was unproductive, which was exactly the same response given last year. That means that, as an island, we have 570,000 hours to recapture every week, which surely gives us an opportunity to think about change.”

Asking what would happen if a change was made, Mr Murphy said that higher levels of productivity would deliver “a real circular benefit” to the Island.

“As we start driving change and putting more energy through the flywheel, it gains momentum and the benefits increase,” he said. “More productive people are better paid, therefore delivering a higher standard of living. Businesses see lower costs and higher profits, which delivers higher tax revenue without raising tax rates, having a positive impact on public services.”

Stressing that not all changes needed to be huge, Deputy Morel said: “ӣƵ’s economy is the accumulation of the work that we all do. Therefore, every tiny improvement made comes together and makes a massive difference to the way the Island works.

“The overall gain needed is enormous but I believe that because we are, at heart, enterprising, we can tap into that spirit and deliver the change needed to look after ourselves.

“While the finance sector remains the biggest driver of our economy, and I don’t see anything changing that in the near future, we also need to recognise the contribution of our other industries. The hospitality sector, for example, enables the finance industry because it provides the connectivity and facilities that workers want.

“No one sector is greater or more important than any other. It is by collaborating that we will improve the Island’s economy.”

Also addressing delegates at the conference was keynote speaker Jim Lawless, and a report on his presentation will run in next week’s JEP Business.

– Advertisement –
– Advertisement –